Investments

Investment in Joint Venture with Tim Hortons Inc.

Wendy’s is a partner in a Canadian restaurant real estate joint venture (“TimWen”) with Tim Hortons Inc. Wendy’s 50% share of the joint venture is accounted for using the equity method of accounting. Our equity in earnings from TimWen is included in “Other operating expense, net.”

Presented below is an unaudited summary of activity related to our investment in TimWen included in our unaudited condensed consolidated financial statements:



	Three Months Ended
	March 31, 2013			April 1, 2012
Balance at beginning of period	$	89,370		$	91,742

Equity in earnings for the period	3,124			2,991
Amortization of purchase price adjustments (a)	(777		)	(780		)
	2,347			2,211
Distributions received	(2,701		)	(3,253		)
Foreign currency translation adjustment included in “Other comprehensive (loss) income, net”	(1,877		)	2,135
Balance at end of period (b)	$	87,139		$	92,835

_____________________


(a)	Based upon an average original aggregate life of 21 years.


(b)	Included in “Investments.”

Presented below is a summary of certain unaudited interim income statement information of TimWen:



	Three Months Ended
	March 31, 2013		April 1, 2012
Revenues	$	9,024	$	9,129
Income before income taxes and net income	6,247		5,982

Investment in Joint Venture in Japan

A wholly-owned subsidiary of Wendy’s has a 49% share in a joint venture for the operation of Wendy’s restaurants in Japan (the “Japan JV”) with Ernest M. Higa and Higa Industries, Ltd., a corporation organized under the laws of Japan (collectively, the “Higa Partners”). Wendy’s investment in the Japan JV is accounted for using the equity method of accounting and our equity in losses is included in “Other operating expense, net.”

Wendy’s has provided certain guarantees and the joint venture partners have agreed on a plan to finance anticipated future cash requirements of the Japan JV as further described below. Presented below is an unaudited summary of activity related to our investment in the Japan JV included in “Other liabilities” in our unaudited condensed consolidated financial statements:



	Three Months Ended
	March 31, 2013			April 1, 2012
Balance at beginning of period	$	(1,750	)	$	77
Equity in losses for the period	(1,156		)	(367		)
Balance at end of period	$	(2,906	)	$	(290	)

Presented below is a summary of certain unaudited interim income statement information of the Japan JV:



	Three Months Ended
	March 31, 2013			April 1, 2012
Revenues	$	759		$	607
Loss before income taxes and net loss	(592		)	(708		)

In 2012, Wendy’s (1) provided a guarantee to certain lenders to the Japan JV for which the Higa Partners have agreed, should it become necessary, to reimburse and otherwise indemnify us for their 51% share of the guarantee and (2) agreed to reimburse and otherwise indemnify the Higa Partners for our 49% share of their guarantee of a line of credit granted by a different lender to the Japan JV to fund working capital requirements. As of March 31, 2013, our portion of these contingent obligations totaled approximately $3,100 based upon then current rates of exchange. The fair value of our guarantees is immaterial.

In January 2013, the joint venture partners agreed on a plan to finance anticipated future cash requirements of the Japan JV. Wendy’s and the Higa Partners agreed to fund approximately $3,000 and $657, respectively, of future cash requirements of the Japan JV, of which $1,000 and $219, respectively, were paid in April 2013. As determined by the amount of capital contributions by each of the partners, Wendy’s will become the majority owner of the Japan JV. As a result, the Japan JV will be consolidated with and included in Wendy’s consolidated financial statements beginning in the second quarter of 2013.

Our obligations, including the remaining funding of anticipated future cash requirements of the Japan JV of approximately $2,000, could total up to approximately $6,700 if the Higa Partners are unable to perform their reimbursement and indemnity obligations to us.

Sale of Investment in Jurlique International Pty Ltd.

On February 2, 2012, Jurl Holdings, LLC, a 99.7% owned subsidiary, completed the sale of our investment in Jurlique International Pty Ltd. for which we received proceeds of $27,287, net of the amount held in escrow and recorded a gain on sale of this investment of $27,407, which included a loss of $2,913 on the settlement of a related derivative transaction. The gain was included in “Other expense, net and investment income, net” in our condensed consolidated statement of operations for the three months ended April 1, 2012. The amount held in escrow as of March 31, 2013 was $3,386, which was adjusted for foreign currency translation and was included in “Deferred costs and other assets.”

We have reflected net income attributable to noncontrolling interests of $2,384, net of an income tax benefit of $1,283, for the three months ended April 1, 2012 in connection with the equity and profit interests discussed below. As a result of this sale and distributions to the minority shareholders, there are no remaining noncontrolling interests in this consolidated subsidiary.

Prior to 2009 when our predecessor entity was a diversified company active in investments, we had provided our Chairman, who was also our then Chief Executive Officer, and our Vice Chairman, who was our then President and Chief Operating Officer (the “Former Executives”), and certain other former employees, equity and profit interests in Jurl. In connection with the gain on sale of Jurlique, we distributed, based on the related agreement, approximately $3,667 to Jurl’s minority shareholders, including approximately $2,296 to the Former Executives.